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Smart microgrids represent the best opportunity for developing nations to bring reliable electricity to rural areas

Significant cost saving opportunities also arise by employing smart microgrid systems in developed countries and reliability of electricity is enhanced, as the vast majority of blackouts, brownouts, or other electricity interruptions arise from grid problems and not from the power plants which are often located hundreds of miles away from customers.

The Galvin Electricity Initiative defines smart microgrids as, “…modern, small-scale versions of the centralized electricity system. They achieve specific local goals, such as reliability, carbon emission reduction, diversification of energy sources, and cost reduction, established by the community being served. Like the bulk power grid, smart microgrids generate, distribute, and regulate the flow of electricity to consumers, but do so locally. Smart microgrids are an ideal way to integrate renewable resources at the community level and allow for customer participation in the electricity enterprise. They form the building blocks of the Perfect Power System.” — The Galvin Electricity Initiative

Not much of a factor a decade ago, microgrids are expected to explode into a $40 billion-a-year global business by 2020, according to Navigant Research, a clean-technology data and consulting company. In the U.S., about 6 gigawatts of electricity — enough to power as many as 4.8 million homes — will flow through microgrids by 2020. Reporting by Bloomberg

The microgrid market is heating up quickly, with deployments occurring around the world in a variety of application segments. Navigant Research forecasts that global annual microgrid capacity will increase from 685 Megawatts in 2013 to more than 4 Gigawatts by 2020 under a base scenario. Reporting by Navigant Research

Paul Orzeske, president of the Honeywell International Inc. says “We are seeing requests for proposals going up significantly, 30 to 40 percent higher than last year.” Honeywell built a $71 million microgrid for an FDA research center in Maryland and the agency is in the midst of a $213 million addition that will be online early next year. Reporting by Bloomberg

The industry is moving into the next phase of project development, focusing on how to develop projects on fully commercial terms. As the microgrid market is evolving, innovative solutions are coming to the fore. For example, two new subsegments – grid-tied utility distribution microgrids (UDMs) and direct current (DC) microgrids – are attracting increased market attention. Reporting by Navigant Research

The Navigant Research report is available for purchase by clicking Microgrid

Smart Microgrids Save Money and Lower Carbon Footprint

It must be said that one of the many benefits of a smart microgrid installation is the saving of hundreds of thousands, or even millions of dollars per month, in electricity costs. One example is the University of California at San Diego (UCSD) smart microgrid system which saves that institution about $850,000. each month in electricity costs.

UCSD can also sell any excess power their smart microgrid produces at various times of the day or night to the main California grid through a net-metering connection.

U of C San Diego’s mixed conventional and renewable energy smart microgrid generates 92% of its electricity demand with 42 MegaWatts (MW) of peak power. Not only does it save UCSD $10.2 million dollars per year, it adds valuable stability to the campus electricity service.

“Our campus does $1 billion a year in research,” said Byron Washom, the university’s director of strategic energy initiatives. “We have an electron microscope that every time we have a supply disruption, it takes six weeks to recalibrate. We can’t let that happen.”

These savings aren’t an anomaly. The FDA estimates it’s already cutting about $11 million a year off its electric bill through both self-generation and the ability to sell power back to the grid — savings that will rise to $25 million a year when an addition is completed in 2014. — Reporting by Bloomberg

We all know that saving $25 million dollars per year (at just one FDA office complex!) is a big deal. That’s a savings of over $2 million dollars, each and every month.

Incidentally, during Hurricane Sandy, as millions of people were forced to survive without electricity, the smart microgrid at the FDA research centre and at Co-Op City, a 45,000-resident housing cooperative in the Bronx, New York, kept the power flowing by automatically disconnecting from the obliterated grid and running in what’s called “island mode.” Reporting by Bloomberg

In the U.S.A. alone, electricity service interruptions cost the business community some $200 billion dollars per year. Lawrence Berkeley National Laboratory has said that lost ‘business continuity’ (resulting from outages and electrical power quality issues) add another $80 billion to $150 billion to that figure.

Historic Utility Business Model Under Threat

Utility companies are feeling the pressure from numerous sources these days as renewable energy threatens their longstanding business model generally, and specifically, their Merit Order ranking, along with stricter environmental standards for energy producers. Now along comes smart microgrids to completely ruin their day.

However, some foresighted utilities see smart microgrids as an adjunct to their existing operations and as a way to add power generation capacity nearer to electricity demand centres, saving millions of dollars in the combined costs of land acquisition for new transmission line corridors, the initial ‘pylons and power line’ construction and annual maintenance.

Not to mention capturing some much needed green energy points with increasingly environmentally responsible consumers.

Some utilities are hedging their bets. With the help of $10 million in U.S. Energy Department and state grants, SDG&E has set up a microgrid in the remote desert town of Borrego Springs, about 90 miles northeast of San Diego. When a severe rainstorm knocked out utility power to the town last month, the microgrid’s collection of rooftop solar panels, micro-turbines and batteries was able to keep electricity flowing to nearly half the town’s customers, including buildings sheltering the elderly and ill from the desert heat. — Reporting by Bloomberg

Ultimately, whether smart microgrids are owned by foresighted utility companies seeking to protect market share and lower electrical transmission costs, or are owned by investor groups, cooperatives, individual investors, local governments, or any combination of those — multi-billions of dollars worth of microgrids are going to be installed by 2020.

Smart Microgrids are Powering Up

And even that $40 billion dollar business might just be the tiniest of microgrid beginnings if the stars align between local rooftop solar power producers, local wind farms, and local biomass power plants.

If utility companies fail to adapt to 21st century thinking by creating smart microgrids that serve the needs of their customers — people living in rural communities and small cities may no longer need standalone utility companies, and decide to set up their own electrical generation facilities.

Smart Microgrid in Sendai, Japan – Natural Gas plus Solar Power. “Perhaps the most well-known microgrid demonstration on this planet, The Sendai Microgrid Project was one of the four major New Energy and Industrial Technology Development Organization (NEDO) ones carried out in Japan between 2005 and 2008.” Image courtesy of U.S. Department of Energy Berkeley Lab